The Creation of World Poverty Part 8

THE CREATION OF WORLD POVERTY

TERESA HAYTER

Pluto Press in association with Third World First

Second edition 1990

PART VIII

Chapter 12: Workers and wages

• The problem of finding workers for mines and plantations was a continuous one. As long as workers have access to their own means of production they will not work for someone else.
• Where the Europeans did not themselves take over the ownership of the land they needed to persuade local people to produce for the market, rather than for their own consumption.
• There were some cases in which local farmers quite eagerly grew cash crops in order to gain access to imports.
• In some places, in particular in the Caribbean and in South America, they were simply not available in sufficient numbers, and African slaves were imported.
• Even after slavery was abolished in the 19^th century these continued to provide a more or less captive labour force.

Elsewhere the problem was more complicated. In Africa there are examples of Africans being forced to work for Europeans, or to grow cash crops, by gun and whip. The best known of these examples were in Tanganyika under German rule, in Portuguese colonies right up to the period of the liberation struggle, and in French Equatorial Africa and the French Sudan in the 1930s. The use of more-or-less open forms of forced labour was widespread; the British made use of the practise up to the second world war.

But possibly the most usual way of getting Africans and others to produce cash crops was to extract tribute or taxes; these had to be paid either in the cash crop desired or in money for Europeans for a wage. This meant that the time and land that could be devoted to producing food was reduced and that subsistence farming was deprived of many able-bodied men and women. Migration became a massive phenomenon in Africa in particular.

• The inducement to work in European mines or farms was also sometimes reinforced by deliberate attempts to depress living standards in subsistence areas.
• Europeans were concerned not only with obtaining raw materials and agricultural commodities, but obtaining them at very low cost. Therefore the wages paid to workers and the prices paid to peasant producers had to be as low as possible.
• Slaves were of course not paid at all, although they had to be fed and sheltered, more or less.
• After the formal abolition of slavery (which was not everywhere effective), hunger drove them to work for a pittance.
• One method of keeping down wages was to make sure that, although wages might provide for the bare subsistence of the workers themselves, the cost of providing for children who would supply the next generation of workers, was borne not by their employers or by the state, but by others.
• This system was applied widely to workers in colonial areas, especially in Latin America and Africa, and still applies to the situation of migrant workers in Southern Africa and elsewhere.

Multinational companies, especially those currently manufacturing consumer goods in ‘low wage areas’ for consumption in the rich countries, pay wages that are a fraction of those paid to workers in rich countries; pick and choose among workers; use women, children and apprentices; take them at their fittest; sack them when they are worn out; and leave them euphemistically-termed ‘informal section’ in the slums of the cities to take care of any other needs they or their families may have. Thus they are freed of many of the charges that employers and state are expected to take on in the developed countries. There is perhaps another parallel in the so-called ‘brain drain’: underdeveloped countries produce and train doctors and other skilled personnel, who are then used in the developed countries without the cost of training them or of supporting them when they are not working.

The result, over the years, of the various methods of assuring the availability of cheap labour in the dominated areas has been that very large numbers of people are separated from their means of subsistence, are landless or severely impoverished, and have no alternative to seeking employment in the ‘modern’ sector of the economy. Massive unemployment, underemployment and migration from impoverished rural areas into cities in search of employment have become the most obvious features of current forms of underdevelopment.

Thus the use of forced labour, the more-or-less deliberate impoverishment of rural areas, the bare subsistence wages that could be paid to migrant workers because their families remained on their own small plots of land, the small and dispersed labour force, the pool of landless and unemployed people created by colonial policy – all these factors have made it possible for Europeans and now for multinational companies of the West to pay extremely low wages in what are now the underdeveloped countries.

• Attempts to organize trade unions were, and are, crushed. Whereas by the mid-twentieth century workers in Europe and the United States had managed to win some rights and some improvement in conditions and wages, in the colonial and semi-colonial areas conditions remained similar to those of super-exploitation which existed in the earlier stages of European industrialization.
• It is sometimes argued that the differences can be accounted for by differences in productivity. But the fact is that they exist even when the physical output per worker is the same as, or higher than, in similar industries in the developed countries.
• Such disparities in wage levels have given rise to the idea of ‘unequal exchange’ as an explanation of underdevelopment. The theory suggests that, since the exports of underdeveloped countries are produced at very low wages and their imports of mainly manufactured goods from Europe and North America are produced at higher wages, the exchange is an unequal one.
• The argument has been much disputed on the grounds that low wages tend to lead mainly to higher profits for capitalists, rather than to lower prices which are determined only partly, if at all, by the level of wages.
• It can be argued that the low wages paid to workers in underdeveloped countries amount to a transfer of capital from underdeveloped countries to developed countries in the sense that many of the employers whose profits are thereby increased are foreigners who transfer the profits abroad.

 

Chapter 13: Terms of Trade

Another way of looking at unequal exchange is to say that it involves the exchange of goods produced at a low level of technology with goods produced at higher levels of technology. Those in possession of higher levels of technology are likely to have an advantage and to be able to command higher prices for their products, just as skilled workers can get higher wages than unskilled workers.

• The division of labour between developed and underdeveloped countries was imposed by a variety of means. Once it is imposed, it is difficult to escape from it.
• Markets are dominated by the big companies of the developed countries and it is difficult for newcomers to enter them.
• The prices charged for manufactured goods are to some extent monopoly prices, and in any case they rise steadily over time.

The governments of developed countries still exert pressures on underdeveloped countries to open their markets to the manufactured goods of developed countries, for example through the imposition of conditions of loans from the International Monetary Fund (IMF); yet they themselves put up barriers against ‘cheap imports’ from underdeveloped countries which might compete with their own manufacturing industries. They also impose discriminatory tariffs, quotas and freight rates to deter underdeveloped countries from processing their primary products before they export them.

• Representatives of the developed countries still insist that it is good for underdeveloped countries to concentrate on primary products.
• Because they have greatly expanded their exports of primary commodities, the prices of these exports has been increasing less fast than the prices of the manufactured goods which they import.
• What are called ‘terms of trade’ have over long periods been declining.

Underdeveloped countries compete for limited markets for products such as tea, coffee, sugar and rubber, and they have been unable to control the prices paid for them. A notable exception has been oil, whose producers were able to organize in OPEC (Organization of Petroleum Exporting Countries) and increase the price paid to them sixfold between 1972 and 1974. Some other attempts have been made to organize producers’ cartels, for example in bananas, cocoa and bauxite, but they have not been very successful.

• In general the cash crops of underdeveloped countries have been ‘false riches’.

Underdeveloped countries, producing mainly primary commodities and raw materials for the developed countries, have three more problems: the prices for their primary commodities and raw materials not only decline in relative and sometimes in absolute terms, but they fluctuate widely from year to year; their economies are highly dependent on exports; and many of them are also dependent on the export of a few, sometimes one or two, commodities.

• In the mid-1970s, the price paid for sugar dropped from 64 cents a pound to 6 cents a pound in 18 months.
• Underdeveloped countries are not only subjected to the ‘impersonal’ fluctuations of commodity markets; they are subject to the whims of their clients who make their decisions on where to buy on political as well as on economic grounds.
• Between 1975 and 1976 the value of Brazil’s sugar exports to the United States dropped from $100 million to zero.
• When underdeveloped countries are confronted with such situations, they either have to cut their consumption further still or, if they can, they borrow, which only makes their foreign exchange problems worse in the future.
• Since the 1960s the governments of underdeveloped countries have been pressing for better treatment in their trade with developed countries. Such appeals to the better feelings of the governments of developed countries have met with little response.
• The possessors of privileges, especially if they are governments or private companies, do not usually give them away except under pressure, and the only really effective pressure exercised so far in this field has been that of OPEC.

 

Chapter 14: Exports of capital

Chapter 15: Aid

Chapter 16: Industrialisation

Chapter 17: Repression and Foreign Support For It

Chapter 18: Resistance

Chapter 19: Socialism or Barbarism

Bibliography